Time to change lanes: How pro‐market reforms affect informal ventures' formalization speed
研究发现亲市场改革通过改变正规化的成本收益，促使非正规企业快速注册；但企业嵌入性、市场地位和外国竞争会削弱这一效果。
Abstract Research Summary We argue that pro‐market reforms encourage informal ventures to obtain formal registration quickly by altering the relative costs and benefits of joining the formal sector. We furthermore contend that this reform effect is shaped by several contextual factors such that venture embeddedness and market position increase the costs of leaving the informal sector, weakening the effect of pro‐market reforms. Although foreign competition may make the formal sector more competitive and dampen the effect of pro‐market reforms, larger informal economy may induce informal ventures to stay put. Results based on a sample of multicountry ventures support our arguments, suggesting that pro‐market reforms can speed up informal ventures' formalization processes. Managerial Summary We analyze the relationship between pro‐market reforms and informal ventures' formalization speed. We find that pro‐market reforms compel informal entrepreneurs to seek the benefits and to move to the formal sector quickly. Also, more embedded ventures and ventures with larger market positions are less responsive to pro‐market reforms as these ventures incur higher costs in leaving the informal sector. Since strong foreign competition makes the formal sector less attractive for nondominant entities, informal ventures may find pro‐market reforms less attractive in countries with heightened foreign competition. Ventures in countries with more intense foreign competition are less susceptible to the effect of pro‐market reforms. Overall, while pro‐market reforms provide ample incentives to formalize, informal ventures are not uniformly incentivized to do so given these contingences.